Here are five (5) things the market should take away from the results.

1. Growth in Non-Interest Income
Market analysts and stakeholders had expected FBN Holdings to record a low performance in profit as concerns about the economy and the bank’s exposure(s) to key sectors of the economy pushed investors to the sidelines.

However, the bank declared a profit after tax of N17.1bn in Q4 and a better improved PAT of N16.1bn in Q1 2017 despite some of the realities the CEO addressed in communications sent out related to the performance. FBN recorded 68.9% YoY growth in Non-Interest Income to N165.5bn in FY 2016 from N97.8bn in FY 2015 and 10.4% YoY growth to N24.2bn in Q1 2017 from N21.9bn in Q1 2015.

With the bank’s plan to increase its customer base and leverage technological tools by creating digital competencies to enhance revenue and service delivery, the bank can only get better in growing its non-interest income. The bank, arguably Nigeria’s largest financial institution in Gross Earnings and only bank to have carried out over a hundred million transaction per month on the main switch network considering its large distribution of alternative channel and touch points; is expected in Q2’17 and going forward to earn more non-interest income even as it intensifies investments in its processing centre (designed to drop costs related to frauds, efficiency and overheads) to achieve improved results.

2. Pushing Towards ROaE of 10%
Having set a ROaE guidance of 9-10% in 2016. The bank was able to achieve a ROaE of 3% in FY 2016 and has made progress towards its stated 2016 9-10% ROaE outlook with ROaE of 10.9% already achieved in Q1 2017. The “branch and roots” changes made to risk management and improved focus on asset quality is expected to deliver further improvements in the coming quarter(s).

3. Loan Book Restructuring
FBN’s net customer loans and advances grew by 14.7% YoY to N2.1trn in FY 2016 from N1.8trn in FY 2015 and down by 1% ytd in Q1 2017. Total FCY loans constituted about 51% of the bank’s loans in FY 2016 and 50.9% in Q1 2017.

The bank had restructured about 5% of its loan book / portfolio for its Oil & Gas loans which constituted about 70% of the restructured portfolio while 2.5% of the loan was written off in 2016 using the CBN forbearance window. The bank represents that its NPL ratio will revert to the single digit region within the next 24months on the back of active remediation of top exposures.

This is something that should be watched closely over the next reporting periods given its legacy debt status and size.

4. Fiduciary Rule
FBN Holdings Plc is forging ahead with well thought-out changes at each cadre of its management grade – from top executive level to mid management level and ultimately through to its entry level as part of its revamped and best practice governance approach.

The bank had overhauled the risk management framework and governance of its Commercial Banking Group, its information Technology, Financial & Strategy as well as its procurement functions; and also appointed new executives within these functions from best practice organisations and extensive banking, technology, operations and commercial backgrounds.

The time lag for these changes to kick-in is one to watch but the optics look good and represents a clear strategic through-put.

5. Increasing Revenue from non-banking subsidiaries
Non-banking subsidiaries of FBN Holdings have greatly impacted the bottom line of the holding company as most of them turned out impressive performance(s) during the year under review, which served as a cushion for the commercial banking franchise. We expect this sector to continue its growth even as changes in the environmental dynamics will require a constant adjustment. The area of hope stems from both the speed of acculturation to the new focus/approach as well as the turnaround time for delivering on the technological changes to such key operations such as its processing centre to enable FBN benefit by expanding its reach to more value-based customers across various sectors within its innovative products and services portfolio.

In a highly competitive market environment, these will prove more challenging than envisaged. If any bank can aggregate the market potential and extract value quicker, FBN stands the best chance given its approach to convert challenges of scale and size into opportunities. We retain a watching brief on this aspect of its turnaround program with optimism in the current management based on their pedigree.